Railways to compete with road sector for funds

Riding on the wave of its economic turnaround, the railway ministry is eyeing a lion's share in terms of fund allocation for the 11th Five Year Plan. With Rs 20,000 crore surplus capital in its kitty during this fiscal, the ministry this time will try and compete with the road sector, against which it has constantly lost out in terms of Plan allocation. Railway ministry sources say that this time, it is looking at a better allocation under the forthcoming Plan period.

In the 10th Plan it had garnered a paltry Rs 60,600 crore in terms of Plan allocation.

Since the sixth Plan, Railways has been getting only 6-7 per cent plan share vis-a-vis the road sector, whose share has always hovered between 12 per cent and 17 per cent.

Out of the total allocation of Rs 15,25,639 crore for both the sectors under the 10th Plan, the road sector garnered Rs 2,25,977 crore, while railways got only Rs 60,600 crore. Percentage wise, while the road sector's share was 14.8 per cent of the total allocation, railways' share was 4 per cent. Sources attribute this disparity to the fact that railways has always depended on budgetary support, which has been less because of lack of funds. Also due to Railways' poor finances too, the allocation has been less. On the other hand, the one per cent cess charged on petrol and diesel has been a major source of income for the road sector.

However, with Railways having experienced a financial windfall, infrastructure experts point out that it would definitely be able to overtake the road sector.

Not only have the railways revived its capital fund, it has also improved upon its surplus. In 2005-06, the railways' surplus was Rs 13,000 crore, where during the current fiscal, it had already recorded Rs 20,000 crore.

According to analysts, the road sector has no other major sources of fund raising apart from the petrol and diesel cess. Also, the build-operate-transfer (BOT) models on toll and annuity have not generated allot of funds for it because many BOT projects under the National Highway Development Programme (NHDP) are still underway.

Thus the railway ministry officials are upbeat about a better deal under the forthcoming 11th Plan.

Underlining the significance of having surplus funds, analysts said Railways needed to leverage equity in order to raise substantial debt. For this, the ministry's growing emphasis on public-private partnership (PPP) would come in handy.